What is the goal of indemnification in the context of insurance?

The goal of indemnification in the context of insurance is to restore the insured to their financial position prior to a loss. This means that when an insured party experiences a loss covered by their insurance policy, the insurer provides compensation for the loss to ensure that the insured is not left in a worse financial situation than they were before the incident occurred. This principle aims to bring the insured back to the status quo, rather than providing a profit or an enhancement beyond what was lost.

Indemnification does not aim to eliminate all claims against a property, as claims can arise from various circumstances and are part of the insurance mechanism. Additionally, canceling the insurance policy would remove coverage completely and negate the protections that indemnification is meant to provide. Finally, indemnification does not relate to increasing the value of insurable interests. Instead, it focuses on reimbursing the insured for actual losses suffered, ensuring they do not suffer financially due to unforeseen events.